The Sandiganbayan (SBN) Special Fifth Division of five justices, voting 3-2, granted bail to former senator Jinggoy Estrada but the regular SBN Third Division of three justices, voting 3-0, denied it to Janet Napoles; yet both are accused of plundering pork barrel funds, a nonbailable offense. Readers ask: Why?

No bail for Janet. Along with former senator Juan Ponce Enrile and three others, Napoles was charged with plunder. Under the Constitution, "persons … charged with an offense punishable with reclusion perpetua [like plunder], when the evidence of guilt is strong," shall not be bailable. Nonetheless, Napoles claimed that "the prosecution failed to prove that the evidence against her [was] strong"; thus, she should be granted bail.

On March 2, 2016, it denied Napoles' motion for reconsideration (MR), ruling that the prosecution's "clear and strong evidence … [shows] that the offense of plunder has been committed as charged; that accused Napoles is guilty thereof, and that she will probably be punished capitally if the law were administered at this stage of the proceedings."

On Nov. 7, 2017, the Supreme Court affirmed these two SBN resolutions denying bail to Napoles. (Earlier, in a path-breaking decision - Enrile vs Sandiganbayan, Aug. 18, 2015 - the Supreme Court granted bail to Enrile not because of the weakness of the prosecution’s evidence but because of his advanced age and fragile health.)

Bail for Jinggoy. On Jan. 7, 2016, Estrada's petition for bail in another plunder case that also included Napoles was similarly denied via a 215-page Resolution of the SBN's Fifth Division "after finding that the prosecution has presented a strong evidence of guilt against him."

The Fifth Division was then composed of Justices Roland B. Jurado, chair and ponente, Justice Alexander G. Gesmundo (who has also since been promoted to the Supreme Court) and Justice Ma. Theresa Dolores C. Gomez-Estoesta.

Undaunted, Estrada filed on Sept. 13, 2016, a new "Omnibus Motion … to dismiss and/or grant bail." On Sept. 15, 2017, the Special Fifth Division of five granted him bail, not because of the weakness of the prosecution's evidence, but because of a new jurisprudence (Gloria Macapagal-Arroyo vs Sandiganbayan, July 21, 2016) requiring that 1) the information must allege and 2) the prosecution's evidence must prove who the "main plunderer" is.

The majority of three (Justices Maria Theresa V. Mendoza-Arcega, ponente, Reynaldo P. Cruz and Lorifel L. Pahimna) held that "the Information complied with the requirement of alleging a main plunderer … [but] after due consideration of the ruling in the Arroyo case and a review of the evidence thus far presented …, the Court finds that the evidence has not strongly established accused Estrada as the main plunderer." On Nov. 10, 2017, the prosecution’s MR was denied.

Not acquitted. The minority of two (Justices Rafael R. Lagos and Zaldy V. Trespeces) dissented because, to quote Trespeces, "there is strong evidence of Estrada's guilt as the main plunderer for whose benefit the amassing of wealth was undertaken by all of the accused …"

The prosecution can still elevate the majority’s ruling to the Supreme Court, given the narrow 3-2 vote and the nonparticipation of the original members of the Fifth Division who denied bail.

Moreover, unlike former President Arroyo who was acquitted by the Supreme Court, Jinggoy was merely granted bail, not acquitted. Thus, he could still be convicted of plunder because, as the majority itself held, "This ruling does not delve on the guilt or innocence of accused Estrada. It will also not preclude the prosecution from its right to present further evidence during the trial of this case."

In reaction, Ombudsman Conchita Carpio Morales told the media: "We have never been more confident about the evidence we have." Though granted bail, will Jinggoy be eventually convicted of plunder? Abangan.

I made an appearance at a municipal court and then took part in oral arguments at the Supreme Court in quick succession last week.

The lure of appearing before a judge and engaging in courtroom argumentation conjures up a thrilling experience that drives many young people to entertain ambitions of becoming a lawyer. It is said that the biggest class of people in the world is made up of those who, once in their lives, dreamt such dreams.

I have been a litigation lawyer for 26 years now and I have experienced handling all sorts of cases involving criminal, civil, corporate, labor, arbitration, election, human rights, and environmental issues. I have collected quite a handful of courtroom battle stories.

As a young lawyer, I represented an island-municipality in Bicol that was locked in a property dispute with a foreign self-proclaimed philanthropist who built a beautiful playground for kids because he professed a special heart for children. It turned out he was a pedophile who constructed the playground as his ?ranch for children.?

Days before the first hearing, word spread on the island that the best lawyer in the region and a Manila lawyer (referring to myself) would appear in the local court and engage in "pagalingan ng Ingles" (an English speaking contest). On hearing day, the courtroom was packed and its big windows were opened to give the huge overflow outside a chance to watch. The opposing lawyer and I indulged the crowd as we engaged in a furious debate that lasted for more than two hours. Unfortunately, the mayor who hired me died in a boat accident, and a local lawyer was subsequently hired to take my place.

I once represented a Visayan politician who had been falsely charged with the nonbailable crime of murder by his opponents. When I obtained an appeal ruling in Manila that ordered my client's release, I had to use air, sea and land transportation in one day to get him out of prison because of reports that his enemies were planning to kill him in prison. I flew from Manila to the nearest provincial airport, took a 30-minute boat ride, and then hopped on a motorcycle to reach the court that would implement my client?s release. A sudden downpour drenched me in my barong tagalog while on board the motorcycle. I was dripping wet when I met with the judge, but I got my client out of prison alive.

I also handled a case to declare the nullity of the marriage between a couple who growled at each other when they were within smelling distance. One rainy day just outside the courtroom, the spouses quarreled for the nth time and each began thrusting an umbrella at the other. I was in clear danger of being skewered because I was standing between them.

And then there was the international arbitration case in Singapore involving a European company that refused to pay its obligation to our law firm?s Filipino client. We were a small law firm of 10 Filipino lawyers and we faced the world?s second biggest law firm which sent its top Spanish lawyers. The Spanish lawyers exhibited dismissive behavior and were self-assured of winning. But after we cross-examined their witnesses (one of whom I questioned via live video conferencing in Spain), they wore faces of dejection. The British arbitrator rendered a decision awarding substantial damages to our client.

The ultimate dream of every litigation lawyer is to participate in oral arguments at the Supreme Court - an extremely rare opportunity. I am fortunate to have undergone the experience on three occasions. It is a grueling but enriching experience to face questioning by 15 justices that can last for hours.

The oral arguments at the Supreme Court last week involved our petition for protection against Operation Tokhang in behalf of the residents of San Andres Bukid in Manila. During the questioning, Justice Marvic Leonen asked me in jest: "Have you seen my name in a drug list?" I answered: "Not yet, your honor." The audience burst into laughter.

His clients are too terrified to prosecute policemen who shot their relatives in supposed drug raids.

Lawyer Joel Butuyan outlined to the Supreme Court during the "Oplan Tokhang" hearing on Nov. 21 why prosecution was impossible. But his solution could become the blueprint for anti-Tokhang cases all over the country.

No evidence

Butuyan's clients from the slums of San Andres Bukid, Manila, lack money to commute to the courthouse, much less prosecute.

And they lack evidence. Eyewitnesses to Tokhang deaths - the victims - are unavailable to testify.

Residents claim security cameras were shut off before several nighttime attacks. Police formed a perimeter in eight raids, shooing bystanders away with flashlights.

Before drug surrenderer Jack Lord was shot, his brother saw police order nearby stores to close shop.

When Ramon Rodriguez was shot, police guarding the door told relatives, "We were told to watch." They heard gunshots and shouts of "That’s wrong!"

Police also detained relatives who witnessed or inquired about a death.

Reynaldo "JR" Javier Jr. was killed just as his wife went into labor. She and JR's mother were detained, but she was allowed to leave to give birth the next day then returned to the jail.

And evidence appeared planted. Required forensic investigation was never done.

Writ of amparo

Butuyan leads CenterLaw, a team of young human rights lawyers founded in 2003. They solved the lack of evidence and unwillingness to prosecute by reframing the San Andres Bukid cases into a petition for a writ of amparo.

The writ of amparo is a special protection order created in 2007. A judge can issue it immediately because it orders protection, not to jail someone.

The strategy does not need the definitive evidence needed for a full trial. It can be enough for a lawyer to document survivors' fear for their lives.

It is a brilliant, simple solution, a template easily copied in other cities.

CenterLaw's test case was that of vegetable vendor Efren Morillo. Five armed men shot him and four garbage collectors as they played billiards near the Payatas dump in Quezon City on Aug. 21, 2016.

Morillo played dead and rolled into a ravine behind the house. He was eventually taken to the police station near Payatas.

He heard: "He’s tough. He was shot at 3 p.m. but he's alive up to now."

He was taken to East Avenue Medical Center at midnight.

One of the armed men later told reporters that he was Senior Insp. Emil Garcia and that his team just killed drug suspects and known robbers.

Police charged Morillo with assault.

CenterLaw took the rare chance to pilot its amparo strategy with an eyewitness who miraculously survived.

Gil Anthony Aquino and Cristina Antonio - admitted 2016 and 2015 - transformed Morillo's story into a heart-wrenching petition to the Supreme Court. (Aquino was captain of the UP Law team that won the Square Off TV debates in October 2014 and the Price Media Law Moot Court international competition in March 2015.)

The facts were so compelling that the police did not even contest the case. In just a week, the Supreme Court ordered them not to go within 1 kilometer of Morillo.

That was in January and it was a historic first win against Tokhang.

Expanded strategy

CenterLaw expanded its legal strategy by going to San Andres, which had 35 Tokhang deaths in 12 months. Lacking a miracle eyewitness, the lawyers painstakingly compiled affidavits from 39 residents and presented the killings as a systematic pattern.

Twenty-three of the 35 Tokhang deaths involved police. Twenty-four of the victims died during a "kill time' - between 10 p.m. and 3 a.m. Twenty-one died in their homes. Several of them were drug surrenderers or their relatives.

CenterLaw's next innovation was a class suit. It argued that the right to security is a community right.

After Jerry Estreller Jr. and Randy Concordia were killed on Estrada Street, 19 relatives and neighbors slept on tables in a nearby market for three months.

When it rained, they slept in parked jeepneys. The neighborhood needs protection, not just the deceased, Butuyan argued.

He told the Supreme Court that police forced barangay captains to repudiate the suit and confront the lawyers.

Will the court grant?

Butuyan's key challenge is that the Supreme Court does not try facts. Morillo's win was an exception. The second case is more difficult.

But several justices appeared open. Justice Lucas Bersamin encouraged criminal charges so a trial court could take permanent jurisdiction over the case.

Unlike Morillo's win, the Supreme Court might forward the San Andres Bukid cases to Manila judges for review. But even this could inspire other young guns to replicate CenterLaw's blueprint in suits all over the country.

One hopes police act to distinguish professionals from rogues in their own ranks. It is best for the country if they avoid their worst nightmare: a flood of human rights cases or, as Carpio has warned, a case in the International Criminal Court.

In the kind of traffic we have especially in Metro Manila, incidents of road rage are bound to happen because of lack of patience. This is illustrated in this case between two motorists during one of the busiest days of the year, particularly the celebration of All Saints' Day.

The motorists here are Emman who used to work as an OFW and Javier a businessman. Emman is married to Cecille, a registered nurse who temporarily stopped working because of pregnancy although they planned to work in Saudi Arabia after Cecille has given birth.

The incident occurred at a Memorial Park on the eve of All Saints' Day at about 2:30 p.m. when traffic was already heavy inside the park. Both Emman and Javier were already on their way to the exit of the Park riding their respective vehicles. Emman was driving an FX together with Cecille and son Andrew, nephew Kurt and sister in law, Joy. Cecille was seated at the right front passenger seat while the boys and Joy were seated at the middle row behind the driver's seat. Javier, on the other hand was driving a late model automobile sedan with his grandson and three housemaids.

At the intersection inside the park, while Javier was turning left toward the exit and Emman was headed straight toward the exit, their two vehicles almost collided. Emman was able to step on the brakes as Javier continued driving along his way. Emman followed him behind for some time and cut him off when he found the opportunity to do so. Then he got out of his vehicle and knocked on Javier?s car window. A few seconds thereafter, the shooting incident that led to the eventual death of the pregnant Cecille and injuries to Andrew and Kurt, happened.

The versions of Emman and Javier differ as to the incidents immediately preceding the shooting incident. While Emman stated in court that he calmly told Javier to be careful in driving and denied that he was mad when he alighted from his vehicle, eyewitnesses to the incident including two prosecution witnesses uniformly testified that Emman quarreled with or shouted and cursed Javier for the latter?s recklessness at the intersection. Emman?s hostile behavior toward Javier is evident from his testimony in court that he noticed Javier turning red in anger. It is highly improbable for Javier to have turned red in anger had Emman been polite as he claimed he was in scolding Javier.

Emman then said that when he noticed Javier's infuriation, he immediately walked toward his vehicle because according to him the altercation was over. And on his way he met another man who turned out to be Ted, the son of Dino driving another car. A shouting match then ensued between Ted and Emman that prompted Javier to alight from his car with a Glock 9mm automatic pistol in his hand and fired a single shot at the last window on the left side of Emman?s vehicle. The single bullet hit Cecille on the forehead near the temporal region above the left eye and the two children with metallic fragments of the bullet on their faces. Cecille died the following morning after giving birth by caesarian section.

Javier was thereafter charged for the complex crime of murder, double frustrated murder and attempted murder. After trial the lower court found Javier guilty as charged because the shooting was attended by treachery and sentenced him to death by lethal injection which was then still allowed by law. The lower court also ordered him to pay P50,000 civil indemnity; P3.3 million loss of earning capacity of Cecille; P98,000 funeral expenses; P340,000 hospital expenses, P150,000 moral damages, P50,000 attorneys fees and cost of suit.

On appeal by Javier, the Supreme Court (SC) modified the lower court decision. Javier is guilty of homicide only for the death of Cecille and is sentenced to eight years and one day as minimum to 14 years, eight months and one day as maximum. And for each count of slight physical injuries on Andrew and Kurt Javier is sentenced to 20 days imprisonment. All the pecuniary awards are affirmed,

The SC ruled that the shooting was not attended by treachery. The encounter between Emman and Javier was a chance encounter. They were total strangers before their vehicles almost collided at an intersection inside the Memorial Park. Chance encounters, impulse killing or crimes committed at the spur of the moment or preceded by heated altercations are generally not attended by treachery for lack of opportunity of the accused to deliberately employ a treacherous mode of attack. Thus the sudden attack by Javier due to his infuriation by reason of Emman?s provocation is without treachery. Sudden attacks made by the accused preceded by curses and insults by the victims or acts taunting the accused to retaliate are without treachery as the victim or his companions were sufficiently forewarned of reprisal.

Furthermore the pictures of the FX show that it?s other passengers were not visible from the outside. While Javier admitted Emman?s mentioning to him that he has passengers in the SUV while he was shouting and cursing him, there is no opportunity for Javier to see the passengers when he fired the shot; that he deliberately employed a mode of attack to gain undue advantage over the intended or the actual victim. So there is no treachery and the crime committed is only homicide (People vs Gonzales, Jr. , G.R. 139542, June 21, 2001)

At first glance, the Masterpiece Cakeshop case - for which the United States Supreme Court will hear arguments on Dec. 5 - looks easy. In 2012 Charlie Craig and David Mullins attempted to buy a wedding cake at Masterpiece Cakeshop in Lakewood, Colo. The owner, an evangelical Christian named Jack Phillips, refused to sell them one. The Colorado Civil Rights Commission found Phillips liable for sexual-orientation discrimination, which is prohibited by the state?s public accommodations law. State courts have upheld the commission's decision.

The reason the nation's high court is giving the case a second glance is Phillips's First Amendment claim that he was not, in fact, discriminating on the basis of sexual orientation, but on the basis of a particular message: endorsement of same-sex marriage. Phillips made it clear to the gay couple that he would happily sell them other items: birthday cakes, cookies, and so on. He welcomes LGBT customers; he is simply unwilling to use his artistic talents in the service of a message that he deems immoral.

One might better appreciate Phillips's position by considering a second case. In 2014, not long after the commission announced its Masterpiece decision, William Jack attempted to buy a cake at Azucar Bakery in Denver, Colo. Specifically, he requested a Bible-shaped cake decorated with an image of two grooms covered by a red X, plus the words "God hates sin. Psalm 45:7" and "Homosexuality is a detestable sin. Leviticus 18:22." The owner, Marjorie Silva, refused to create such an image or message, which conflicts with her moral beliefs. She did, however, offer to sell him a Bible-shaped cake and provide an icing bag so that he could decorate it as he saw fit. The customer filed a complaint alleging religious discrimination, which is also prohibited by Colorado's public accommodations law. But the commission disagreed, arguing that Silva?s refusal was based not on the customer?s religion, but on the cake?s particular message.

Jack Phillips's supporters have been crying foul since. If the First Amendment protects Marjorie Silva's right not to condemn same-sex relationships, they argue, then it protects Jack Phillips's right not to celebrate them. But there is a key difference between the cases, and the difference points to a useful line-drawing principle.

Put aside the plausible objection that treating cakes as speech - especially cakes without writing, as in the Masterpiece case - abuses the First Amendment. And put aside the even more plausible objection that whatever ?speech? is involved is clearly that of the customers, not of the baker: As law professors Dale Carpenter and Eugene Volokh explain in a Masterpiece brief, "No one looks at a wedding cake and reflects, 'the baker has blessed this union.' " After all, that objection is arguably just as applicable to the Bible-cake case.

Finally, put aside the objection that ?It?s just cake!? That could be said to any of the parties in these disputes, and it doesn?t alter the deeper rationale for anti-discrimination laws, which are about ensuring equal access in the public sphere ? not just for cakes, flowers, and frills, but for a wide range of vital goods and services.

It is tempting to describe Marjorie Silva?s Bible-cake refusal as the moral mirror-image of Jack Phillips?s wedding-cake refusal: Neither baker was willing to assist in conveying a message to which they were morally opposed.

But that?s not quite right. For recall that Silva was willing to sell the customer a Bible-shaped cake and even to provide an icing bag, knowing full well what the customer intended to write. She was willing to sell this customer the very same items that she would sell to any other customer; what he did with them after leaving her store was, quite literally, none of her business.

Therein lies the crucial difference between the cases: Silva?s objection was about what she sold; a design-based objection. Phillips?s objection was about to whom it was sold; a user-based objection. The gay couple never even had the opportunity to discuss designs with Phillips, because the baker made it immediately clear that he would not sell them any wedding cake at all. Indeed, Masterpiece once even refused a cupcake order to lesbians upon learning that they were for the couple?s commitment ceremony.

Business owners generally have wide discretion over what they do and do not sell: A vegan bakery needn?t sell real buttercream cakes. A kosher bakery needn?t sell cakes topped with candied bacon, or in the shape of crosses. By contrast, business owners generally do not have discretion over how their products are later used: A kosher bakery may not refuse to sell bread to non-Jews, who might use it for ham-and-cheese sandwiches.

(Of course, there are times when the buyer?s identity or the intended use is legally relevant. It is permitted ? indeed, required ? to refuse alcohol to minors, or torches to someone who announces that he is about to commit arson. But that legal concern does not apply here.)

In his defense, Phillips has pointed out that he refuses to sell Halloween cakes or demon-themed cakes; he analogizes these refusals to his unwillingness to sell gay wedding cakes. In other words, he maintains that his turning away the gay couple was about what was requested, not who was requesting it.

The problem with this retort is that ?gay wedding cakes? are not a thing. Same-sex couples order their cakes from the same catalogs as everyone else, with the same options for size, shape, icing, filling, and so on. Although Phillips?s cakes are undeniably quite artistic, he did not reject a particular design option, such as a topper with two grooms ? in which case, his First Amendment argument would be more compelling. Instead, he flatly told Craig and Mullins that he would not sell them a wedding cake.

Imagine a fabric shop owner who makes artistic silk-screened fabrics. It would be one thing if she declined to create a particular pattern, perhaps because she found it obscene. It would be quite another if she offered that pattern to some customers, but wouldn?t sell it to Muslims who intend it for hijabs. The Bible-cake case is like the first, design-based refusal; the Masterpiece case is like the second, user-based one.

Or imagine a winemaker. It would be one thing if she declined to produce a special blend. It would be another if she offered that blend, but refused to sell it to Catholic priests who intended it for sacramental use. The latter would run afoul of Colorado?s public accommodations law, which prohibits religious discrimination.

But wait: Isn?t there a difference between discrimination that?s user-based and discrimination that?s use-based? The winemaker in our example is not refusing to sell wine to Catholics, or even to priests; she is merely refusing to sell the wine for a particular purpose. Same with the fabric-store owner, who might happily sell to Muslims making curtains. In a similar vein, Jack Phillips is explicitly willing to sell LGBT people a wide range of baked goods, as long as they are not to be used for same-sex weddings.

This kind of sophistry has been rejected by the Court before. As the late Justice Scalia once wrote, ?A tax on wearing yarmulkes is a tax on Jews.? Some activities are so fundamental to certain identities that discrimination according to one is effectively discrimination according to the other. That?s certainly true of wearing hijabs and religion, or celebrating mass and religion; likewise of same-sex weddings and sexual orientation. In such cases, use-based discrimination and user-based discrimination amount to the same thing.

But couldn?t one argue in the Bible-cake case that a commitment to a traditional Biblical understanding of sexuality is similarly fundamental to William Jack?s identity? Of course. But it doesn?t follow that Marjorie Silva, the baker in that case, must alter what she sells in order to help him express that identity. While Jack Phillips, the Masterpiece baker, is akin to the winemaker who won?t sell wine for mass, Silva is more like one who sells wine to all customers, but declines to put crosses on the labels. Again, her refusal is design-based, not identity-based or use-based. Unlike Phillips, she is willing to sell this customer the same items she sells to any other customer.

We?ve seen Jack Phillips?s First Amendment argument before. Back in 1964, when Maurice Bessinger of Piggie Park BBQ fought public accommodations laws that required him to serve black customers equally, he invoked his rights to freedom of speech and freedom of religion. Bessinger noted that he was happy to sell black customers takeout food; he simply did not want to be complicit in what he saw as the evil of integrated dining. The Supreme Court unanimously rejected this argument.

The details of the current cases are different, as is the social context. As I?ve argued before at the Stone, it?s a mistake to treat sexual-orientation discrimination as exactly like racial discrimination ? just as it?s a mistake to treat it as entirely dissimilar. But the underlying principle from Piggie Park holds in the case at hand: Freedom of speech and freedom of religion do not exempt business owners from public accommodations laws, which require them to serve customers equally. The Court should uphold the commission?s decision and rule against Phillips.

John Corvino is a professor of philosophy at Wayne State University and a co-author of "Debating Religious Liberty and Discrimination."

The Securities and Exchange Commission (SEC) has ordered the revocation of online news site Rappler's license to operate.

In a 29-page decision dated January 11, the SEC ruled that Rappler, Inc. and its controlling shareholder Rappler Holdings Corp. were "liable for violating the constitutional and statutory Foreign Equity Restrictions in Mass Media enforceable through rules and laws within the mandate of the Commission."

The online media outfit has been accused of purportedly using "deception" to circumvent a provision in the Philippine Constitution, which mandates 100 percent Filipino ownership of mass media.

Citing Rappler as the "mass media entity that sold control to foreigners," the SEC ruling, which was served to Rappler on Friday, decided to revoke the online news company's certificate of incorporation.

Likewise stripped of its certificate of registration was Rappler's 98.77-percent stockholder, Rappler Holdings Corp., which the SEC said was "existing for no other purpose than to effect deceptive scheme to circumvent the Constitution."

The decision was signed by SEC Teresita Herbosa and three SEC Commissioners: Antonieta Ibe, Ephyo Luis Amatong, and Emilio Aquino. Another Commissioner, Blas James Viterbo, did not take part, in the decision-making.

Based on the 29-page SEC en banc ruling, the SEC said there was "substantial evidence that respondents intentionally created an elaborate scheme, upon which its receipt of over a million dollars from a foreign investor would be theoretically defensible – the investor would never own stock and would never receive dividends and he would never become an officer or director but respondents would still be able to give him his money's worth in the form of negative control and cash contributions, all through a private contractual arrangement."

The SEC added that since this "deceptive scheme" involved the sale of a security, it fell within Section 26 or the Anti-Fraud provision of the Securities Regulation Code.

A copy of the decision will "be furnished the Department of Justice for appropriate action," the SEC said.

Based on the copy of the ruling, SEC had investigated this matter since December 22, 2016, when the Commission en banc received a letter from the Office of the Solicitor General requesting an investigation into Rappler and Rapper Holdings Corp. "for any possible contravention of the strict requirements of the 1987 Constitution" with regard to the issuances of Philippine depositary receipts to NBN Rappler LP and Omidyar Network Fund LLC.

In the same ruling, the SEC declared the Philippine depositary receipts (PDRs) issued to Omidyar "void" citing this as a "fraudulent" transaction under the Securities Regulation Code.

PDRs refer to derivative instruments which are based on the value of equities as underlying assets but don't grant ownership to the holder.

In Rappler's case, however, the SEC argued that the PDRs issued to Omidyar gave the foreign entity sufficient control even without having actual ownership.

"The foreign equity restriction is very clear. Anything less than 100 percent Filipino control is a violation. Conversely, anything more than exactly zero percent foreign control is a violation," SEC said in its ruling.

"Here, the stockholders must have prior discussion with and approval of at least 2/3 of the PDR Holdings, meaning Rappler is at the very least under obligation to consult with Omidyar Network. The stockholder has become, in effect, subservient to the holder. It is neither 100 percent control by the Filipino stockholders nor is it 0 percent control by the foreigner PDS holders," the SEC said.

Among others, the SECC also cited the Rule 3.1.8.2. of the 2015 SRC implementing rules and regulations which stated that "control exists whenever one entity has the power to govern the financial and operating policies of (another) entity under a statute or agreement."

The SEC said this would even be true "even if the controlling entity does not own any equity, such as through agreements that grant influence in corporate matters."

Likewise cited was Section 1 of the Commonwealth Act 108 also known as "The Dummy Act" which penalizes any citizen of the Philippines or of any specific country who allows his name or citizenship to be used for the purpose of evading constitutional or legal provisions which require Philippine or any specific citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege. The same law states that any alien or foreigner profiting thereby may also be held liable.

The SEC also cited the foreign negative investment list which included mass media as among the industries where 100-percent ownership was required. /kga

SINGAPORE - Rappler reports against the Securities and Exchange Commission (SEC) are misleading and slanted.

I was the first to defend Rappler when the president publicly denounced its sale of Philippine depositary receipts (PDRs) to Omidyar Network (ON) in 2015. PDRs are financial instruments used to comply with our Constitution's ban on foreign control of media.

Last week, I explained why the SEC had basis to sanction Rappler. Beyond this, we must fact-check how Rappler publicly argues its case.

First, Rappler misleadingly implies the SEC approved its PDRs.

It restated: "PDRs were disclosed to the SEC in 2015 in compliance with the SEC's regulations" ("FAQs: Rappler's SEC case," 1/22/18 ).

This is deceptive if you understand securities law's central rule: offers and sales of securities must be registered unless exempt from registration.

ABS-CBN and GMA register their PDRs before offering them to thousands of investors.

In contrast, the SEC does not approve offers to less than 20 persons, such as a startup founder selling shares to relatives. Here, one merely files a notice that there were less than 20 investors.

Thus, all Rappler sent was a notice it only had one investor. Per page 3 of the SEC order, the ON contract was only provided after the SEC summoned Rappler in February 2017.

The 20-person exemption is so basic that even a nonlawyer who used it in a $1-million investment should know it.

But even after both the SEC and I publicly clarified this, Rappler still implies the SEC approved its PDRs.

Second, a Rappler blurb misleadingly read: "many speculated that the regulator will go after the two broadcast giants next" ("SEC: No review of ABS-CBN, GMA PDRs after Rappler," 1/19/18 ).

Inquirer's Doris Dumlao-Abadilla wrote the exact opposite: the SEC questioned "veto rights" in the ON PDRs not found in ABS-CBN and GMA PDRs. The SEC did not void all PDRs; it even upheld a second set of Rappler PDRs that had no vetoes.

Unlike Dumlao-Abadilla, misinformed pundits feared the SEC order hit other media companies. But Rappler could not have misunderstood - it was the recipient.

PDRs' defining characteristic is they separate PDR holders from the company, unlike shares of stock. But the ON PDRs gave veto rights over any change in Rappler's articles of incorporation. PDR holders and the company suddenly had a link they cannot have.

This veto's validity can be hotly debated.

But no credible securities lawyer would claim a PDR with this veto is the same as ABS-CBN’s and GMA's. This is like saying White Walkers are human except they are dead.

The change is so fundamental that BDO Capital president Eduardo Francisco opined the ON PDRs are not "true" PDRs.

But Rappler kept implying the ON PDRs are the same, even after the SEC summoned Rappler in February 2017, even in its report on the SEC order on Jan. 15, 2018. Thus, sympathizers such as "Pinoy Ako Blog" did not cite the veto in defending Rappler after the SEC order.

I certainly felt misled when Rappler published my July 2017 column defending PDRs without informing me of the veto rights and that the SEC was investigating these.

The list goes on.

Rappler argues ON waived the veto. But page 15 of the SEC order correctly noted a waiver does not erase the veto from the PDRs.

Rappler reported Agnes Callamard and two other United Nations Special Rapporteurs "slammed moves to shut down Rappler." Unlike Inquirer’s report, Rappler’s omitted they argued "philanthropic contributions do not amount to foreign ownership" - crucial context they are ridiculously misinformed.

PDRs are commercial investments. If ON purchased the equivalent of 5 percent of Rappler for $1 million, this made Rappler worth P1 billion on paper.